Brazil Largest Beneficiary of Mercosur’s US$ 300 Bi in Foreign Investment

Mercosur member countries received US$ 300 billion in foreign direct investments between 1990 and 2004, reported the United Nations Economic Commission for Latin America and the Caribbean, Cepal. The strong influx of foreign capital had different macroeconomic impact in the regional economies with Brazil benefiting the most, in merit to its financial innovation policies.

In the second half of the nineties foreign investment was ten times higher than in the seventies in constant US dollars, revealed the paper titled: "Direct foreign investment and development: Mercosur experience".

However it was mostly Argentina and Brazil that benefited at that time. Actually while direct foreign investments in Paraguay and Uruguay never managed to cross the US$ 450 million annual threshold, in 2000, Brazil was receiving US$ 32 billion.

At macroeconomic level the strong influx of capital helped the establishment of transnational corporations affiliates in the region, boosting the average productivity index of the block, underlines Cepal.

Although the paper points out that this kind of investment does not necessarily guarantee more growth, it rejects the negative perception that is currently predominant in several countries of the region.

Foreign direct investment is also closely linked to the globalization process that the world has been undergoing since 1990, when the Cold War ended.

In 1990 there were 37.000 transnational corporations with 170.000 affiliates, but by 2004 those numbers had jumped to 70.000 and 690.000, with almost half of them in the developing countries.

Mercopress